Commercial Property:The Reduction of stamp duty on commercial property transactions will immediately increase the value of investments by 3 per cent and help restore confidence in a sector which has been in decline since last autumn.

The cut in stamp duty from 9 to 6 per cent may also persuade investors to divert funds into the Irish market rather than the UK and Europe, where rates are generally between 4 and 6 per cent.

However, the change in stamp duty rates will not in itself reactivate the market, which has come to a virtual standstill in recent months because of the absence of lending by the banks. Overall turnover so far this year has been slightly more than €400 million, compared to almost €2 billion in 2007. The dramatic fall in transactions has also been accentuated by a sharp decline in values and a weakening rental market.

Commercial property agents have estimated that institutional property investments have fallen in value by between 25 and 30 per cent since the start of the year.

The news of a cut in stamp duty will be welcomed particularly by Irish Life and Canada Life, which are currently attempting to offload property portfolios in Dublin.

Asked for his reaction to the lower stamp duty, John Mulcahy, managing director of Jones Lang La Salle said: "We'll have it . . . though it is no big deal. The 9 per cent rate was a negative factor and people went to extraordinary lengths to mitigate it, something which was in nobody's interests, least of all the exchequer." He said the change in itself would not make a huge difference in a market overwhelmed with negative factors, not least of which was the complete absence of liquidity.

Commercial property expert Bill Nowlan said the reduction in stamp duty would remove a major disincentive for people to invest in the Irish market. The move, coupled with an increase in investment yields, could restart a market which had been stalled for over a year. There was now a better chance that money which might otherwise have gone to the UK would be invested at home.

Guy Hollis, managing director of CB Richard Ellis, said that reducing the stamp duty to a more equitable 6 per cent could mean that international investors may now be encouraged to invest here.

While a rate of 6 per cent was still higher than the European average of 5 per cent and the UK rate of 4 per cent, he welcomed the Government's "prudent decision" to amend the tax.

"This move will not solve the slowdown in the commercial property sector but it should help to stimulate buying activity," he said.